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It is now easier to establish a self-settled Special Needs Trust for your clients. Effective date as of December 31, 2016, Section 1917 (d)(4) (A) was revised to allow an individual with a disability as defined by the Social Security Act to establish his or her own Special Needs Trust.

Now, it is no longer necessary to have a court establish the Special Needs Trust. The new Federal Law, “21st Century Cures Act” may reduce the time, money and effort in having to establish a Special Needs Trust.

We have attached a copy of the applicable section of the Act. If you have clients with a disability receiving means-tested government benefits and receiving a settlement, the client themselves can establish their own Special Needs Trust and protect their government benefits.

If you have any other questions or need a Special Needs Trust established contact either Pete Losavio or Kent DeJean at (225)769-4200.

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Any assistance received due to a declared major disaster or catastrophe by the President of the United States of America, is permanently excluded as a resource for Medicaid.

The funds provided should be identifiable as disaster funds. The FEMA program money received by flood victims is considered to be disaster assistance, and any interest earned is excluded as an income resource.

If you have any questions or need any further information, please give us a call at 225-769-4200, or visit our website at http://www.LosavioDeJean.com

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There is a limited window of opportunity to take benefit of a Social Security strategy that could increase your Social Security monthly benefits.

If you were born April 30th 1950 or earlier you can file for benefits at full retirement age and then suspend them to earn delayed retirement credit while allowing a spouse to collect benefits on your record while you delay An a married couple has until April 29th of 2016.

Also if you were born before April 30th 1950 or earlier , an individual can file and suspend. If circumstances change the individual can go back and collect the suspended benefits. However, future benefits will be based on the earlier filing date. The suspension must be filed by April 29th 2016 .

If you and your spouse were born between May 1st 1950 and January 1st 1954 you can still file a restricted application for benefits until April 29th of 2016. One spouse can choose whether to take a spousal benefits or one based on their work record.

If you are in this age group it is important that you seek advice and take action before April 29th 2016.

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Mr. Losavio is giving a workshop at Amber Terrace Assisted Living Tuesday January 12, 2016 at 4:00pm and 6:30pm and Thursday January 14,2016 at 4:00pm an 6:30pm. Amber Terrace Assisted Living is located at 8585 Summa Ave., Baton Rouge, LA 70809. Seating is limited so call ahead and reserve your seat 1-800-426-6104.

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Currently there are 31 states* where Medicaid treats a community spouse’s IRA account as a countable resource. Thus, before an institutionalized spouse can qualify for Medicaid benefits, the community spouse’s IRA account must be either protected or spent-down.

Protecting the Community Spouse’s IRA

The best way to protect the community spouse’s IRA account is to make it part of his or her community spouse resource allowance (CSRA). In 2015, with the maximum CSRA being $119,220, if a couple had total countable resources of $275,000 ($175,000 of which was in the community spouse’s IRA account) the community spouse would be advised to leave $119,220 in the IRA account. As for the balance of $55,780, the community spouse would further be advised to invest the amount into a tax-qualified DRA compliant immediate annuity (Tax-Qualified Annuity, or TQA).

Taxation and the Community Spouse’s IRA

The $119,220 remaining in community spouse’s IRA account would not be subject to income taxation. As for the funding of the TQA – which was accomplished by an IRA Direct Transfer (preferred method) or a 60-day IRA Rollover** – the funding transaction would not be subject to income taxation. However, as the community spouse receives the monthly payments from the TQA, he or she would be taxed on the payments received in the given year.

Eliminating the Remaining Spend-Down

As for the remaining spend-down of $100,000, the community spouse would be advised to invest the amount into a DRA compliant immediate annuity (DCIA). Since a DCIA involves after-tax dollars, unlike the TQA, which involves pre-tax dollars, only a small portion of each payment is subject to income taxation in the year of receipt.

One Annuity versus Two Annuities

For purposes of simplicity, some clients have requested to use only one annuity rather than the two detailed above. However, because the Internal Revenue Code does not allow qualified funds (pre-tax) to be mixed with non-qualified funds (post-tax), two annuity contracts are required.

Conclusion

At Krause Financial Services, we understand that Medicaid planning with IRAs is complicated. However, between our unique annuity product line and vast state-specific Medicaid knowledge, we are more than equipped to handle your most challenging cases. So, if you have a case involving a countable IRA, please do not hesitate to get in touch with us. We look forward to it!

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The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind:

1. Give to qualified charities. You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.

2. Keep a record of all cash gifts. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.

3. Household goods must be in good condition. Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.

4. Additional records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.

5. Year-end gifts. Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.

6. Special rules. Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. Use Form 8283, Noncash Charitable Contributions to report these gifts. For more on these rules, visit IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Mr. Peter J. Losavio, Jr. will be giving a seminar at the Zachary Branch Library Conference Room Tuesday October 20th @ 4:00pm and 6:00pm and Tuesday October 27th at 4:00pm and 6:00pm. To attend this seminar call 1-800-426-6104 to reserve your seat.

As you may know, the Annual Enrollment Period for Medicare beneficiaries will be October 15 through December 7. This is the period during which you may make certain changes in the way you want to receive your Medicare benefits in 2016, including the following:

A beneficiary enrolled in Original Medicare (Parts A and B) may enroll in any Medicare Advantage Plan or stand-alone Part D Prescription Drug Plan offered in the service area – with no medical underwriting.

A beneficiary enrolled in a Medicare Advantage plan may choose a different plan or return to Original Medicare.

A beneficiary enrolled in a Medicare Part D Prescription Drug Plan may choose a different plan.

Note: The Annual Enrollment Period does not apply to Medicare Supplement policies, which are usually renewed on the anniversary date of the beginning of coverage. Open enrollment in such coverage applies only when a beneficiary first enrolls in Medicare Part B. Guaranteed issue (without medical underwriting) applies only at that time and when a beneficiary qualifies for a Special Enrollment Period, e.g., upon the loss of employment-based coverage.

Any beneficiary currently enrolled in a Medicare Advantage plan or Part D Prescription Drug Plan should have already received information from the current plan about any changes to be effective January 1. No action is needed if the beneficiary is satisfied with the current plan and the scheduled changes.

Effects of provisions of the Affordable Care Act (ACA) continue to impact health insurers who offer Medicare Advantage and Prescription Drug Plans and, in turn, the Medicare beneficiaries enrolled in such plans. In response to changes in reimbursement from the Centers for Medicare and Medicaid Services (CMS) and benefits costs, most insurers are implementing changes effective January 2016. Such changes may be in the form of premiums, out-of-pocket costs or both.

The purpose of this notice is only to remind you of your annual options and is not a recommendation that you make any changes. However, this is a good time to review alternative plans, particularly if your prescription drugs have changed. If you are affected by Medicare plan changes announced for 2016, you should review them carefully – first of all to ensure you understand them, and then to decide whether you are satisfied with the changes or whether you should consider an alternative plan for 2016.

Even with any changes announced for next year, your current plan may still be the right one for you.

Factors to Consider in Evaluating a Medicare Advantage or Prescription Drug Plan

Amount of monthly premium

Out-of-pocket costs for services you anticipate receiving

Participation of your physicians and other health care providers in plan networks

Inclusion of your prescription drugs in Part D plans’ formularies and the tiers/copays to which your products are assigned

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Although the Centers for Medicare and Medicaid Services (CMS) has not yet announced changes for 2016, the following might be expected, based on preliminary information released:

Monthly Medicare premium – The standard Part B premium of $104.90, which has not changed the past three years, is likely to increase in January 2016 for many beneficiaries. It is still possible for the Secretary of the U.S Department of Health and Human Services to intervene to temper the increases. If that does not happen, Medicare premiums could look like this, based on current reports:

Beneficiaries receiving Social Security retirement benefits – $104.90 (no change, since retirement benefits are projected to include no cost-of-living increase).

Beneficiaries not receiving Social Security retirement benefits and with Modified Adjusted Gross Income (MAGI) below $85,000 for single tax filers and below $170,000 for joint filers – $159.30, a 52% increase.

Beneficiaries with MAGI above these thresholds – between $233.00 and $509.80, including Income-Related Monthly Adjustment Amount (IRMAA), compared to a range of $146.90 to $335.70 in 2015. There could also be increases in the IRMAA for Part D.

Part B deductible – Also unchanged the past three years, the current deductible of $147 may increase, but no announcement has been made. Of course, beneficiaries enrolled in Medicare Advantage and many Medicare Supplement plans would not be subject to payment of this amount. However, it would undoubtedly be reflected in increased Medicare Supplement premium rates upon renewal.

Part A out-of-pocket costs for inpatient care – These costs – currently $1,260 per stay of 1-60 days, $315 per day for days 61-90, and $630 per day for each of 30 lifetime reserve days – typically rise by modest amounts each year and will likely increase in 2016.

Part D coverage gap – The amount of drug cost that sends a beneficiary into the coverage gap and the amount of out-of-pocket cost at which the beneficiary leaves the gap will both rise in 2016. The percentage of the cost of generics while in the gap will slightly decrease, and the copay amounts paid for both brands and generics once out of the gap will slightly increase.